A weekly thread to discuss financial matters - from personal all the way up to global.
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Notes -
Looking for some General Advice for
RetardsDummies on going from renting to owning…I live with my fairly-recently-married wife, renting a condo in a major city, and we’ve been looking at options to buy property instead. Well, as luck would have it, our landlord just recently reached out offering to sell us this very condo. His asking price isn’t a great deal, but it’s a fair one and I’m confident the unit will appreciate over time, probably significantly (aside from the general housing trend, it’s in a convenient and fast-gentrifying location). Based on what I’ve seen so far, we wouldn’t get this good of a place and this good of a location any other way.
So, I’m thinking we’re going to go through with it. My father in law has offered to gift us a frankly ridiculous-to-me sum to use as a down payment (in his half-joking words, “think of it as coming from your inheritance”) because he’s very eager for us to have a real asset on the books, so I’m not too worried about balancing monthly payments against the length of the mortgage, although I would love to hear what people think about that. One concern on my mind is that we will eventually need to sell and move to a proper house further out of the city, I assume before the mortgage is paid off. We’re in our late 20s and intending to have our first kid within the next couple of years. This place is big enough and located well enough to be suitable for at least one kid up through toddler-age (and in fact there are a number of families with young kids in the building) but for a 2nd or 3rd (or just an older kid) we will certainly want an upgrade. If anyone has gone through that process I’d be curious to hear as well.
Basically I’m just looking to hear the general thoughts of motteposters who have gone through this already. Also curious about the expected etiquette for negotiation.
For condos specifically, find out how much they have in the reserve fund and if they've been skimping on any maintenance. I have a friend whose condo fees have been rising quite a lot the last few years because they don't have enough reserves to replace the building's old roof and it's getting harder and harder to get insurance to still cover the building because of it.
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Me and my wife were in a similar situation, with a flat in the city and planning to have our first child. The financially responsible thing would have been to have baby #1 in the city, and then moved out to the suburbs when #2 came along.
In the end, we moved out to the suburbs first. It wasn't the most economical decision, but I'm glad we made it. It's very comforting to be able to say 'this is our house, we own it, and we're probably going to live here forever'. Moving was stressful enough with my wife being pregnant at the time, it would have been harder if we'd had a baby or toddler I think.
But it really depends on how much you like the condo. If you weren't living there and were just viewing it as a potential buyer, is it the one you would go for?
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Owning a home is great. I am glad I do, most days. It is not a good financial choice.
For example: since I bought my house 4 years ago, it has gone down ~10% in real dollars. Then, leverage by a factor of 5+. The market has gone up 80%. The lost market growth on my down payment alone works out to about the same amount as I've paid in mortgage etc.
Even if the math did work in favor of owning in my specific case, this is like being the smug friend who held NVDA or BTC. Not a genius, just a lucky gambler. Actually, worse: a REIT would be a better analogy for that. Owning a specific house and being happy it worked out well is way higher variance. Foundation cracks? Meth lab next door? Have fun.
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